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"CFLA to Intervene in U.S. Supreme Court Case that Seeks to Extinguish the CFPB in its Entirety"

Defendants' CFLA and ANDREW LEHMAN, hereby move the court Under Federal Rules of Civil Procedure 24 for a Motion to Intervene as a Matter of Right Because The Issues in The Instant Matter Are So Detrimental to the Rights of These Intervenors That A Resolution in This Case Would Affect The Rights of The Intervenors. Intervenors Would like to file herewith this Motion to Intervene into the Central District of California Case [CFPB v. Soliel Law LLC, USSC Appeal Docket No. 17-56324) , and file concurrently herewith CFLA's U.S. Supreme Court Opening Brief as against the Bureau of Consumer Financial Protection, in the matter of [CFPB v. Soliel Law LLC, USSC Appeal Docket No. 17-56324) in the United States Supreme Court on the controlling issue of Whether the Plaintiff, Bureau of Financial Protection (i.e. CFPB) is an Unconstitutional Agency that lacks teh Enforcement Power to bring an Action as against CFLA or ANDREW LEHMAN.

Defendants hereby move the Court to stay All District Court Proceedings in this case [CFPB v. CFLA, C.D. of California CASE NO.: 2:19?cv?07722]; pending resolution of the United States Supreme Court Matter, in Writ of Certiorari, granted for review on or about October 19, 2019, (9th Circuit Appeal No. Case No. 17-56324); resulting from, the ruling in from the Central District of California Case: CFPB v. Soliel Law LLC, Case No. 8:17-cv-01081-JLS-JEM, on the controlling issue of “Whether the Plaintiff in this matter, the Bureau of Consumer Financial Protection [hereinafter “CFPB”] is a Constitutional Entity sufficient to bring the instant Enforcement Action as a matter of Law"

The United States Supreme Court Case Will Hear the Issues on the Unconstitutionality of the CFPB in or about June of 2020. Many scholars believe that the CFPB is an unconstitutional Agency and will be shut down by the United States Supreme Court.

A Short Summary of Legal Argument in Support of the Dissolution of the CFPB Based on its Unconstitutional Structure is set forth below-

The CFPB is Unconstitutional

The CFPB Is Unconstitutionally Structured

The CFPA places sweeping legislative, executive, and judicial power all “in the same hands” of a single person (the Director) who is unaccountable to the democratic process— “the very definition of tyranny.” In re Aiken Cty., 725 F.3d 255, 264 (D.C. Cir. 2013) (quoting The Federalist No. 47 (J. Madison)). The Director is not answerable to the President because he is removable only for cause. See 12 U.S.C. § 5491(c)(3).[1]

Congress cannot use its power over the purse to check the Director, because he has the sole power to fund his agency from the Federal Reserve System’s operating expenses, and Congress is prohibited from reviewing the Director’s budget determinations. Id. §§ 5497(a)(1) & 5497(a)(2)(C). Nor is the Director checked by the deliberative decision-making process of a multi-member commission structure or by a short tenure, as he serves a fixed five-year term. Id. § 5491(c)(1). The Director’s power is vast, as he has broad authority to “prescribe rules or issue orders or guidelines pursuant to” 19 distinct consumer protection laws. Id. § 5581(a)(1)(A); see also id. § 5481(14). That power was previously exercised by seven different government agencies. See id. § 5581(b) (transferring to the CFPB “[a]ll consumer financial protection functions” previously exercised by the Board of Governors of the Federal Reserve, the Comptroller of Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and certain functions of the Department of Housing and Urban Development and the Federal Trade Commission).

The CFPB exercises legislative power by enacting regulations with the force of law, executive power by policing compliance with those regulations, and judicial power by adjudicating enforcement actions and imposing sanctions on those found to have violated those regulations. See 12 U.S.C. §§ 5512 (rulemaking authority for consumer finance law); § 5531(b) (rulemaking authority for “unfair, deceptive, or abusive acts or practices”); § 5562 (investigative authority); § 5563 (adjudicative authority); § 5564 (independent litigation and enforcement authority; § 5565 (power to impose sweeping legal and equitable relief and penalties).

This accumulation of power in the hands of one individual (the Director) is unprecedented and violates Article II of the Constitution and separation of powers, particularly because the Director controls a self-funding agency with wide-ranging executive powers. See Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 484 (2010). The CFPB is an unconstitutional agency, and its action and this Petition against CFLA and LEHMAN is VOID. See, e.g., Noel Canning v. NLRB, 705 F.3d 490, 499, 514 (D.C. Cir. 2013), aff’d on other grounds, 134 S. Ct. 2550 (2014).

Under Article II of the Constitution, the Executive power is vested in the President, who must “take care that the laws be faithfully executed.” U.S. Const. art. II, §§ 1 & 3. “The President cannot ‘take care that the laws be faithfully executed’ if he cannot oversee the faithfulness of the officers who execute them.” Free Enter. Fund, 561 U.S. at 484. Accordingly, the President “must have the power to remove [executive officers] without delay.” Myers v. United States, 272 U.S. 52, 134 (1926). Limitations on the President’s removal power are presumptively unconstitutional, and the Supreme Court has recognized just two exceptions.

First, Congress may limit the President’s ability to remove a multimember “body of experts.” See Humphrey’s Ex’r v. United States, 295 U.S. 602, 624 (1935). Second, Congress may limit the President’s ability to remove inferior officers with limited tenure and a narrow scope of powers. See Morrison v. Olson, 487 U.S. 654, 671-73, 695-97 (1998).[2] In Free Enterprise Fund, the Supreme Court considered whether Congress could restrict the President’s “ability to remove a principal officer, who is in turn restricted in his ability to remove an inferior officer.” 561 U.S. at 484. The Court held that “dual for-cause limitations on the removal of [inferior officers] contravene the Constitution’s separation of powers.” Id. at 492. The Court observed that “[p]erhaps the most telling indication of the severe constitutional problem . . . is the lack of historical precedent for this entity.” Id. at 505 (quoting Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 537 F.3d 667, 699 (D.C. Cir. 2008) (Kavanaugh, J., dissenting)).

The CFPB suffers from this lack of historical precedent. Unlike the Federal Trade Commission (the agency at issue in Humphrey’s Executor), the Director is not intended to be “non-partisan” or to “act with entire impartiality,” nor is he “called upon to exercise the trained judgment of a body of experts appointed by law and informed by experience.” Humphrey’s Ex’r, 295 U.S. at 624 (internal quotations and citation omitted). Nor is the CFPB headed by a multimember commission with its own internal checks—instead, it is headed by a single unchecked Director. And unlike the “independent counsel,” the Director does not have “limited jurisdiction and tenure” or “lac[k] policymaking or significant administrative authority.” Morrison, 487 U.S. at 691. Rather, the Director has a lengthy (potentially indefinite) tenure, broad authority, and sweeping enforcement powers.

Indeed, the United States recently identified only three occasions in which Congress has created agencies with a single head subject to for-cause removal. Those three agencies are the Office of Special Counsel, the Social Security Administration, and the Federal Housing Agency. Id. As the United States explained, “until relatively recently all independent agencies have been structured as multi-member commissions.” Id. at 17. Moreover, these three single-director independent agencies have been controversial and, critically, cannot bring law enforcement actions against the public like the CFPB is able to do. See id. at 17-19.

The CFPB’s structure is an unconstitutional departure from historical practice. The CFPB has broad authority “to prescribe rules or issue orders or guidelines pursuant to any Federal consumer financial law” previously administered by seven different agencies. See 12 U.S.C. § 5581(a). It can “conduct hearings and adjudication proceedings,” and “issue subpoenas.” Id. §§ 5563(a) & 5562(b)(1). The CFPB also has the power to pursue a broad range of legal and equitable relief, including “civil money penalties,” either in the district courts or on its own. Id. §§ 5565(a)(2) & 5563(a).

Compounding matters, the CFPB also operates free from Congressional supervision. The Director has sole authority to set the CFPB’s budget and demand up to 12% of the Federal Reserve System’s operating expenses. 12 U.S.C. § 5497(a)(2)(A). This demand is exempt from “review by the Committees on Appropriations of the House of Representatives and the Senate.” 12 U.S.C. § 5497(a)(2)(C). Congress conferred this authority to the CFPB despite the fact that under the Constitution Congress has exclusive control over the power of the purse. See U.S. Const. art. I, § 7, cl. 1 & § 8, cl. 1. Combined with the limitations on the President’s ability to remove the Director, the Director’s power is virtually unchecked.

Under these circumstances, where the Director has the unilateral power to enact regulations, police compliance, and adjudicate enforcement actions and impose sanctions on the public, and is free from Congressional or Presidential supervision, this unprecedented concentration of power in the Director is unconstitutional. The public must be able to “ensure that those who wield[]” power are “accountable to political force and the will of the people.” Freytag v. Comm’r, 501 U.S. 868, 884 (1991). The CFPB’s unprecedented insulation from all democratic checks and accountability violate this constitutional mandate.

The CFPB Must Be Stricken In Its Entirety

The CFPB’s numerous constitutional defects require striking the agency as a whole. The Court cannot render the CFPB’s structure constitutional by striking the offending provisions from the CFPA; to do so would amount to rewriting the statute and creating a different agency than the one intended by Congress, which is well beyond the Court’s proper judicial role. See Free Enter. Fund, 561 U.S. at 510; see also Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987) (Court cannot simply strike a provision where the result would be an agency that would not “function in a manner consistent with the intent of Congress” or result in “legislation that Congress would not have enacted.”) (emphasis omitted).

The Congressional record makes clear that with the CFPB, Congress intended to create an agency “completely independent, with an independently appointed director, an independent budget, and an autonomous rulemaking authority.” 156 Cong. Rec. H5239 (2010). There is no indication that Congress would have given these powers to an agency under the President’s control, so striking the offending provisions—even if limited to the “for cause removal” provision—will not cure the CFPB’s constitutional defects.

The CFPB Lawsuit is VOID Because It Was Filed By An Unconstitutional Agency with No Authority to Prosecute these claims

For the reasons set forth above, the CFPB is an unconstitutional agency. As an unconstitutional agency, the CFPB “lacks authority to bring this enforcement action.” FEC v. NRA Political Victory Fund, 6 F.3d 821, 822 (D.C. Cir. 1993). The Court must deny the Petition because the CFPB’s powers can “be enforced only by a constitutional agency accountable to the Executive.” Free Enter. Fund, 561 U.S. at 513.

Additionally, Defendants’ Fourth and Fifth Amendment rights will be violated if it is forced to litigate this action against the CFPB and the CFPB is determined to be unconstitutionally structured. Prosecution of this case by the CFPB will only be “consistent with the Fourth Amendment” if it is issued “‘for a purpose Congress can order.’” United States v. Golden Valley Elec. Ass’n, 689 F.3d 1108, 1115 (9th Cir. 2012) (quoting Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 209 (1946)).

Because the CFPB is unconstitutional, it follows the Complaint filed by the CFPB was not for a purpose Congress can order, rendering it inconsistent with the Fourth Amendment. Likewise, the Fifth Amendment provides Defendants’ with structural protection from being subject to federal power only by a constitutional agency. See, e.g., U.S. ex rel Kelly v. Boeing Co., 9 F.3d 743, 749-50 (9th Cir. 1993); Free Enter. Fund, 561 U.S. at 501 (calling this structural protection “critical”). By purporting to authorize the unconstitutional CFPB to p[prosecute the instant action against Defendants’, Congress violated this protection and deprived Defendants CFLA and LEHMAN of due process. U.S. Const. amend. V

The Unconstitutionality of the CFPB and Its Quasi Executive, Quasi Legislative and Quasi-Judicial Powers Give the CFPB Unfettered Discretion to Wreak Havoc on Any Individual or Business and Creates a Climate of Oppression and Deprives Persons of Constitutionally Afforded Liberties

Since August of 2017, the CFPB, and it’s attorneys have used threats, intimidation, harassment, and abusive conduct towards CFLA and LEHMAN; including (a) threatening CFLA Employees to leave their jobs, (b) threatening CFLA Client’s to Not Utilize the Cutting Edge Services of CFLA, (c) bribing CFLA Clients with compensation if they would make complaint as against CFLA or back the CFPB, (e) threatening to use Criminal Action as Against CFLA and LEHMAN and their employees if they failed to cooperate with the CFPB, (f) intimidated CFLA Employees by Having FBI Agents show up at CFLA Employees Personal Residence to threaten him to not go back to work for CFLA, (f) giving CFLA’s employees legal advice that CFLA and LEHMAN were violating the Law and (i) “Had no chance” and must (ii) “Sign the Settlement Agreement” as their (iii) “Expert Staff of Attorneys has concluded as a matter of law that CFLA had violated the Statutes” and that the (iv) “CFPB Attorneys sought independent review from Federal Court Judges that concluded that the CFPB’s Legal Theories Were Correct and Would be Sustained in District Court as a Matter of Law,” all the while CFLA and ANDREW LEHMAN were not represented by counsel during this extremely evasive campaign of harassment, abuse, threats, and intimidation by the CFPB. The damage is done. CFLA has gone bankrupt having to deal with the CFPB and lost customers and lost its excellent reputation due to the smear campaign by the CFPB.

[1] 1 In fact, because the Director is removable only for cause and serves a five-year term that extends “until a successor has been appointed and qualified,” 12 U.S.C. § 5491(c)(2), it is possible that a President could prevent a successor from ever installing a successor Director, or Congress could keep a Director in office by refusing to qualify a choice for a new Director.

[2] The Supreme Court has since restricted Humphrey’s Executor and Morrison to their facts, and their ongoing viability has been questioned. See Free Enter. Fund, 561 U.S. at 483 (declining to “reexamine” Humphrey’s Executor or Morrison because the parties had not requested it to do so); see also In re Aiken Cnty., 645 F.3d 428, 444, 446 (D.C. Cir. 2011) (Kavanaugh, J., concurring) (“The [Free Enterprise Fund] Court’s rhetoric and reasoning are notably in tension with Humphrey’s Executor.”).


New SCOTUS petition: CFPB enforcement must be undone if agency is unconstitutional

hreuters.com | October 1, 2019

By Alison Frankel

(Reuters) - The drama over the constitutionality of the Consumer Financial Protection Bureau took another surprise turn on Monday, when a Mississippi payday lender, All American Check Cashing, filed a petition asking the U.S. Supreme Court to grant review of its constitutional challenge to the CFPB before the 5th U.S. Circuit Court of Appeals issues an opinion in the case.

But All American’s lawyers at Gibson Dunn & Crutcher are asking the Supreme Court for more than just a ruling that the CFPB’s unusual structure is unconstitutional. Their petition also argues that the justices can only cure the bureau’s constitutional defect with a drastic remedy: undoing CFPB enforcement actions or even striking down the law that created the bureau.

The Supreme Court, as I’ll explain, seems likely to take up the question of whether the bureau’s structure – in which a lone director who can only, by statute, be removed from office for good cause – violates separation of powers doctrine. The justices could opt to resolve the constitutional question without calling the CFPB’s entire existence into doubt. All-American’s petition challenges the Supreme Court to address both the purported constitutional defect and its remedy.

The context for this latest petition is important. Back in June, you’ll recall, a California debt relief firm Seila Law filed a petition asking the Supreme Court to decide whether the CFPB’s structure is constitutional. Seila had challenged the bureau’s structure after receiving a civil investigatory demand. It lost its case at the 9th Circuit, which relied on the D.C. Circuit’s en banc 2018 ruling in PHH v. CFPB to hold that the bureau’s structure did not violate separation of powers doctrine. Seila’s Supreme Court lawyers at Paul Weiss Rifkind Wharton & Garrison argued that even though the lower courts had not split on the constitutionality of the CFPB’s structure, the issue was bubbling in so many cases that it needed to be resolved.

The Justice Department and the CFPB agreed. On Sept. 17, DOJ and the CFPB the urged the justices to grant review of Seila Law’s case – and to hold that the CFPB director cannot be insulated from the president’s authority.

The filing marked a change in the CFPB’s stance. For years – even after the Trump Justice Department publicly questioned the constitutionality of the CFPB’s structure in a 2018 Supreme Court brief – the bureau defended its structure in appellate courts, including the 9th Circuit in Seila Law’s case and the 5th Circuit in the All American litigation. But after the Sept. 17 brief to the Supreme Court, the CFPB informed lower courts that it had changed its mind.

Shareholders of Fannie Mae and Freddie Mac saw the CFPB’s acquiescence as an opportunity for them to make a Supreme Court play. Like the CFPB, the federal bureau that oversees Fannie and Freddie, the Federal Housing Finance Agency, is headed by a lone director who can only be removed for good cause. In early September, the en banc 5th Circuit held that structure to be unconstitutional, in a case in which some Fannie and Freddie shareholders challenged a 2012 deal that swept all of the housing entities’ net profits to the Treasury Department. CUT

Last week, those shareholders filed a petition asking the Supreme Court to take their case, instead of the Seila Law case, to decide whether the structure of the CFPB and the FHFA comports with separation of powers doctrine. Their lawyers at Cooper & Kirk argued that even though the shareholders prevailed at the 5th Circuit on the constitutional question, their clients effectively lost the case because the 5th Circuit refused to invalidate the 2012 net worth sweep, instead ruling that the remedy for the FHFA’s unconstitutional appointment clause was to sever the clause and strike the director’s for-cause protection. Unlike the CFPB, Cooper & Kirk said, the FHFA is continuing to defend the constitutionality of its structure. So by taking the FHFA case, the firm said, the justices could hear from an agency arguing on its own behalf, rather than from a court-appointed amicus arguing a position that the CFPB has renounced.

The Fannie and Freddie shareholders’ petition also argued that their case would put the question of an appropriate remedy squarely before the court, since the en banc 5th Circuit vigorously debated the consequences of the FHFA’s constitutional defect and split sharply on how to cure it.

But the Fannie and Freddie petition was last week’s twist. This week’s new development is Gibson Dunn’s petition for All American - which pounds hard on the theme of using its case to decide on a remedy for the CFPB’s allegedly unconstitutional structure. The new petition argues that the Seila Law case would not afford the justices that opportunity because Seila challenged the CFPB over a civil investigatory demand. According to All American’s petition, that demand might be enforceable even if the CFPB director were found to have been unconstitutionally appointed. By contrast, the petition said, the CFPB’s enforcement action against the check cashing company falls within the CFPB’s core power. If the Supreme Court agrees to hear All American’s case – either instead of or in addition to the Seila case – it will necessarily have to decide not only whether the CFPB’s structure is constitutional but also what to do if it isn’t.

“The remedies question,” said All American counsel Helgi Walker of Gibson Dunn in an email statement, “is where the constitutional rubber hits the road, and if it is not addressed the current uncertainty about what should actually happen in cases involving the CFPB will only grow.”

I reached out to Seila Supreme Court counsel Kannon Shanmugam of Paul Weiss, who declined to provide a statement on All American’s competing cert petition. Brian Barnes of Cooper & Kirk declined to comment on the Gibson Dunn filing.

The Justice Department did not immediately respond to my request for comment on the All American petition. But DOJ did address the remedial issue in its brief urging the Supreme Court to take the Seila case. DOJ said the justices could use the Seila case as a vehicle to decide an appropriate cure for a constitutional defect in the provision appointing the CFPB’s director. That cure, according to the government, would be to sever the appointment clause and strike its problematic insulation of the CFPB director, just as the Supreme Court did in 2010’s Free Enterprise Fund v. Public Corporation Accounting Oversight Board. A constitutionally-appointed director could then ratify the CFPB’s previous enforcement actions, curing any hangover of unconstitutionality.

All American’s petition argues that DOJ’s proposed quick-and-easy fix is inadequate. “Accepting that position would mean that even successful separation-of-powers challengers will receive no practical relief, and their matters will proceed as if nothing ever happened,” the petition argued. “But actions taken by unconstitutionally structured agencies are nullities and cannot be ratified.”

More fundamentally, according to All American’s petition, the justices can’t simply sever and rewrite the troublesome provision on the appointment of the CFPB director. Congress specifically drafted the Consumer Financial Protection Act to insulate the CFPB director from the president’s control. For the justices to reverse Congress’ intention would, in turn, disrupt the balance of power between the branches, “inflating the president’s power relative to Congress and transforming the CFPB into something Congress never would have created,” the petition said.

Gibson Dunn has been pushing for the demise of the CFPB for years, beginning with the PHH case at the D.C. Circuit. The All American petition presents well-honed arguments by litigators who have walked this ground before. It’s worth pointing out that so far, all of the appellate courts to have examined the structure of the CFPB or the FHFA have rejected arguments for drastic remedies. Even Justice Brett Kavanaugh, who concluded as a judge on the D.C. Circuit that the CFPB is unconstitutionally structured, opined that the problem could be solved by severing the appointment provision.

All of this tactical maneuvering over which case presents the best vehicle for the Supreme Court’s consideration of the CFPB’s structure underscores the need for the justices to take up the issue. As I said when the CFPB first conceded the unconstitutionality of its structure in that joint brief with DOJ, there’s now a black cloud over everything the agency does, and it won’t go away until the Supreme Court offers a final resolution.

The justices are scheduled to conference on Seila’s petition on Oct. 11.


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"CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea–it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-CFLA (2352) for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online)".

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